Displaying items by tag: tax efficiency

Veriti Management LLC recently announced it is rebranding as First Trust Direct Indexing. The provider of tax-advantaged, direct indexing solutions also announced the appointment of Robert Hughes as Chief Executive Officer, taking the reins from Veriti Co-Founder and Managing Partner James Dilworth. Hughes will focus on integrating Veriti’s direct indexing capabilities and technology with the extensive resources and distribution network provided by its new affiliate, First Trust Portfolios L.P. Veriti was acquired by First Trust Portfolios last July. The deal lets First Trust bring direct indexing to its advisor clients, while potentially exposing Veriti to a larger market. The affiliation between the two companies comes at a time when there is strong demand for more tax-efficient, personalized investment solutions. First Trust Direct Indexing seeks to turn volatility into an asset through tax loss harvesting strategies, which have the potential to increase an investor’s after-tax returns. Hughes had this to say about the rebranding and his appointment, “First Trust Direct Indexing is well positioned to help advisors solve the dual demands of individualized account customization and a smart approach to seeking tax alpha that can tilt client portfolios to their satisfaction. I’m excited to be joining at a pivotal time for our business and the industry.”

Finsum:Following the acquisition of Veriti by First Trust Portfolios last July, the firm is rebranding as First Trust Direct Indexing and appointing Robert Hughes as CEO.

New Age Alpha, which provides equity and fixed-income advisory and sub-advisory services, recently announced the launch of its new direct and custom indexing platform, SPACE. SPACE, which stands for Systematic Personal Asset Customization Engine, is designed to allow the user to build and trade customized alpha or beta index strategies. While SPACE comes with the typical benefits of other direct indexing platforms such as tax optimization, transparency, and ESG screening, it also includes additional features unique to New Age Alpha. For instance, users can build an alpha index strategy by customizing the underlying holdings of an ETF and utilizing factor screens across growth, value, and New Age Alpha's proprietary "Expectation Risk Factor." SPACE offers three primary applications, direct indexing, custom indexing, and prebuilt strategies. The direct indexing application provides the ability to invest directly in the underlying components of well-known indexes and ETFs through an SMA, allowing maximum tax optimization. The custom indexing application provides the ability to build custom, thoughtfully aligned alpha or beta indexes through personalization across various filters, screens, and factors to meet your client's specific needs. The prebuilt strategies offer the ability to invest using any of the over 120 indexes using New Age Alpha’s proprietary Expectation Risk Factor methodology.

Finsum: Asset management firm New Age Alpha launched SPACE, a new direct and custom indexing platform that offers unique features such as the ability to build an alpha index strategy with the firm’s proprietary "Expectation Risk Factor."

Frontier Asset Management and 55ip are combining their areas of expertise to offer financial advisors a unique set of model portfolios that will minimize risk and seek ideal tax management solutions. The two firms inked a deal this month that will apply 55ip’s tax management solutions to Frontier’s risk-averse ETF strategies so advisors can utilize both techniques within model portfolios. While Frontier does not have any proprietary ETFs, it publishes investment strategies that are used by advisors. The firm establishes a downside risk target for each strategy representing the expected one-year loss potential over 12 months. Their strategies are built around the idea of not losing more than the downside risk target 95% of the time. 55ip, on the other hand, offers tax management for an array of products such as model portfolios, ETFs, direct indexing, and active SMAs. It achieves this through proprietary algorithms, which keep track of the different portfolios the firm oversees along with every tax position and tax law related to those portfolios. Rob Miller, CEO of Frontier had this to say about the deal, “Being able to utilize 55ip’s tax overlay service within our risk-managed services gives a really unique product in the investment advisor space. We’re hoping that investment advisors will get the best of both worlds with tax and risk management for their clients.”

Finsum:Frontier Asset Management, which provides risk-management strategies, and 55ip, which offers tax management solutions are combining their expertise to provide advisors with a unique set of model portfolios.

According to data from the financial technology platform 55ip, a record number of financial advisors are taking advantage of tax-loss harvesting opportunities for their clients. Data from its platform revealed that across client portfolios through Q3, the 2022 YTD tax savings benefit for model portfolios of ETF and mutual funds was 2.99%. Going back to 2020, the annualized tax savings across clients in model portfolios on their platform was 2.82%. The tax savings illustrates the value of ongoing tax loss harvesting within client portfolios throughout the year, compared to those not harvested for tax losses. 55ip, which is a wholly owned subsidiary of J.P. Morgan Asset Management, offers advisors trading and rebalancing capabilities, in addition to automated, personalized, and optimized tax outcomes. Paul Gamble, Chief Executive Officer of 55ip stated “The growth of model portfolios is one of the fastest growing trends in asset and wealth management, but concerns about the tax implication of transitioning and managing client accounts have been a major barrier to broad use by advisors. Volatile markets can be emotionally and financially challenging for investors, but our data indicates they can also present potential opportunities for meaningful benefits from a tax perspective.”

Finsum:Based on data from 55ip’s platform, a record number of advisors are implementing tax loss harvesting in their clients’ model portfolios.

Over the past year, direct indexing has become a hot topic in the financial media. It’s hard not to see why with firms such as Fidelity and Vanguard launching direct indexing solutions. But direct indexing is not a new investment product. In fact, Natixis launched Active Index Advisors Strategies, its direct indexing business, in November 2002 with the AIA S&P 500® direct indexing strategy. The strategy has grown from $4 million in assets under management to nearly $8 billion today. Even more impressive is that the AIA S&P 500® strategy has tracked its benchmark index to within 12 basis points annualized since inception, outperforming on an after-tax basis by over 370 basis points on an average annualized basis. The strategy seeks to outperform on an after-tax basis while providing a pre-tax return similar to the S&P 500 Index. The firm’s direct indexing solutions provide fully customizable SMAs that can be customized for tax purposes, align with investor values such as ESG, or tilt towards factors.

Finsum:Amid a recent push by financial firms to launch their own direct indexing solutions, Natixis celebrates the 20th anniversary of its first direct indexing strategy.